Economic uncertainty created by President Trump's trade policies has caused the U.S. stock market to decline sharply in 2025. The benchmark S&P 500 (^GSPC 0.08%) is currently down 14%, while the technology-focused Nasdaq Composite (^IXIC +0.08%) is down 19%.
Nevertheless, Wall Street remains very bullish on Nvidia (NVDA +0.64%) and Amazon (AMZN 0.78%), both of which ranked among the 10 stocks in the S&P 500 with the highest percentage of buy ratings as of last month.
- Among the 63 analysts that follow Nvidia, 90% have a buy rating on the stock. And the average target price of $170 per share implies 70% upside from the current share price of $101.
- Among the 73 analysts who follow Amazon, 95% have a buy rating on the stock. And the average target price of $255 per share implies 47% upside from the current share price of $173.
Here's what investors should know about Nvidia and Amazon.
NASDAQ: NVDA
Key Data Points
1. Nvidia
Nvidia specializes in accelerated computing, a discipline that pairs specialized hardware with software to speed up complex data center tasks like running artificial intelligence (AI) applications. The company is best known for graphics processing units (GPUs), chips often called AI accelerators, but the company is formidable because it participates in so many parts of the AI economy.
To elaborate, Nvidia has 84% market share in AI accelerators, but the company complements its GPUs with adjacent hardware like central processing units (CPUs) and networking platforms. In fact, Morningstar estimates Nvidia has over 50% market share in networking gear used for generative AI workloads, and expects the company to maintain its leadership through at least 2028.
Importantly, the Trump administration recently hit Nvidia with new export controls on its H20 GPUs in China. The company will take a $5.5 billion charge in the first quarter, and it may lose as much as $18 billion in revenue this year, according to Bloomberg Intelligence. But Nvidia still dominates the AI accelerator market, where spending is forecast to increase at 29% annually through 2030, according to Grand View Research.
Nvidia stock is currently 33% below its high, creating an excellent buying opportunity for patient investors. Wall Street estimates earnings will grow at 38% annually through fiscal 2027, which ends in January. That makes the current valuation of 34 times earnings look cheap, especially when Nvidia topped the consensus estimate by an average of 10% over the last six quarters.
Importantly, investors should not expect an immediate rebound in the stock. Shares could decline further, depending on the terms of President Trump's forthcoming semiconductor tariffs, which the administration plans to announce in the next week. But I think Nvidia can beat the S&P 500 over the next three to five years.
NASDAQ: AMZN
Key Data Points
2. Amazon
Amazon has three important growth engines in e-commerce, digital advertising, and public cloud services. The company already enjoys a strong presence in those markets, and it's leaning on artificial intelligence to further boost revenue and improve operating efficiency. Brian Nowak at Morgan Stanley recently called Amazon an underappreciated AI leader across retail and cloud computing.
To elaborate, Amazon operates the largest online marketplace in the world outside of China and supports its merchants with an expansive logistic network. The company is reinforcing that strength with AI tools that optimize product recommendations, inventory allocation, and delivery routes. In total, CEO Andy Jassy says Amazon is developing about 1,000 generative AI applications to drive cost savings.
Similarly, Amazon Web Services (AWS) is the leading public cloud in terms of revenue, and the most popular cloud platform among developers. Jim Kelleher at Argus Research in a recent note said AWS is "leveraging its leading market share in cloud to become a major player in the AI space." He highlighted its generative AI development platform Bedrock, as well as custom chips for AI training (Trainium) and AI inference (Inferentia).
Amazon stock is currently 28% below its high, which creates a good entry point for patient investors. Wall Street estimates earnings will increase at 16% annually through 2026. That makes the current valuation of 31 times earnings look quite reasonable, especially when Amazon beat the consensus estimate by an average of 29% over the last six quarters.
As a final thought, investors should not anticipate an abrupt turnaround in the stock. The market is rife with bearish sentiment due to President Trump's tariffs, but I think Amazon can beat the S&P 500 over the next three to five years.
